If One-Year U

question 27

Multiple Choice

If one-year U.S. nominal interest rates are 4%, one year Canadian nominal interest rates are 7.5%, and the current spot exchange rate, S₀, is $0.587, then what will the expected spot rate be in one year?

• A) $0.568
• B) $0.607
• C) $0.564
• D) $0.573

---

Definitions:

Equilibrium

A state of balance or stability within a system, often referring to physical balance or chemical reactions.

Inner Ear

The innermost part of the ear, containing organs responsible for hearing and balance.

Otoscopic Examination

A medical procedure using an otoscope to visually inspect the ear canal and tympanic membrane, commonly for diagnosing infections or conditions.

Helix

A type of smooth curve, resembling a spring, which can be found in various natural and man-made structures.